Michael Dell Defends $24.4 Billion Plan to Buy Company

The CEO tells investors that remaking Dell would be easier as a private company, and that Carl Icahn's opposing plan would harm the company.

Michael Dell still believes taking his namesake company private is the best chance it has to reduce its dependence on the shrinking PC market and becoming a bigger player in enterprise data centers.

The company's founder and CEO, who laid out his thoughts in a presentation June 21 to investors that also was filed with the Securities and Exchange Commission, said that transforming from a PC maker to a vendor of enterprise IT solutions and services—already a daunting task—will become even more difficult if the company remains public.

Buying out the company and taking it private is the best way to ensure Dell's long-term success, Michael Dell said.

At the same time, he also pushed back at a bid by activist investor Carl Icahn, who is trying to sell an alternate plan that would include Dell buying back more than 1 billion shares at $14 apiece and keeping the company public. In advocating for the $16 billion tender offer, Icahn has harshly criticized Michael Dell's $24.4 billion plan, saying the $13.65-per-share proposal undervalues the company and benefits the CEO over investors.

However, in his June 21 presentation, Michael Dell not only made the pitch for his bid—which is being offered along with private equity firm Silver Lake Partners—but also let Icahn and others know that, should the offer fail to get the necessary shareholder support at the July 18 investor meeting, he intends to stay on as CEO and work to block Icahn's bid.

"I founded the company and will continue, as I have for the last 29 years, to try to make Dell the best company I can," he wrote. "I will also oppose the kind of imprudent leveraged recapitalization that has been suggested by certain other parties."

The bid by Michael Dell and Silver Lake has been under pressure since it was announced in February. Almost immediately, some of the largest investors—including Southeastern Asset Management and T. Rowe Price—said the proposal greatly undervalued the company and that they would vote against it. In addition, several investors filed suit against Dell, its board and its CEO, while other firms introduced counteroffers.

The one left standing is Icahn, who is backed by Southeastern. Icahn has argued that shareholders would not get a fair price for their stock under Michael Dell's plan, and that while he agrees with the effort to remake the company into an enterprise solutions and services provider, he disputes how Michael Dell wants to go about it. He is working to get Michael Dell's bid rejected, after which he would offer his own slate of directors for Dell's board who would be more open to Icahn's own plans.

He also has said that should he gain control of Dell, that Michael Dell would no longer be the company's CEO.